A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

August 25, 2007

America, you got gamed by 20-something call-center-jockey kids pumping mortgages you couldn't afford and even they didn't understand so they could make a quick commission.

Tens of thousands of life's losers - call center jockeys, bartenders, used car salesmen, Herbalife distributors (you get the picture) - found their way into the unregulated and out-of-control REIC over these past few years. The one saving grace is that they're getting canned left and right - the party is over.

I wonder who'll be picking up the bottle service tab in Scottsdale tonight? Anyone? Anyone?

23 comments:

Anonymous
said...

***To be honest I wish I had been a mortgage broker for a few years. Yeah it was sleazy and you were no better than a used car salesman. But so what. It was easy work, and many made $175K and up a year for essentially being a clerk and filling out paperwork all day long.

What I would have done was save $100K every year and hace $500K in the bank now without a care in the world.

Next housing bubble, which should start around 2015 if history is any indication, I'm there.

Since the brokers made a lot of money and scammed the idiotic middle class and those aspiring to the middle class, they are not the losers. The losers are the taxpaying suckers who will be forced, by the government, to pay for the reckless borrowing.

That's capitalism American-style. And your libertarian hero Ron Paul wants even less regulations on the seamy side of it. He wants to give these slimeballs free reign to screw people as hard as they want.

You voted for it. You all support this corrupt, savage capitalism nightmare. Enjoy.

Just waiting for the YouTube video about this ass floating in a river although a Daniel Pearl type beheading might be nice too. Video taped yourself screwing people and publish it to the world. Brilliant.

"On its way to becoming the nation’s largest mortgage lender, the Countrywide Financial Corporation encouraged its sales force to court customers over the telephone with a seductive pitch that seldom varied. “I want to be sure you are getting the best loan possible,” the sales representatives would say.

But providing “the best loan possible” to customers wasn’t always the bank’s main goal, say some former employees. Instead, potential borrowers were often led to high-cost and sometimes unfavorable loans that resulted in richer commissions for Countrywide’s smooth-talking sales force, outsize fees to company affiliates providing services on the loans, and a roaring stock price that made Countrywide executives among the highest paid in America.

Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers, according to interviews with former employees and brokers who worked in different units of the company and internal documents they provided. One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide.

In a mid-March interview on CNBC, Mr. Mozilo said Countrywide was poised to benefit from the spreading crisis in the mortgage lending industry. “This will be great for Countrywide,” he said, “because at the end of the day, all of the irrational competitors will be gone.”

But Countrywide documents show that it, too, was a lax lender. For example, it wasn’t until March 16 that Countrywide eliminated so-called piggyback loans from its product list, loans that permitted borrowers to buy a house without putting down any of their own money. And Countrywide waited until Feb. 23 to stop peddling another risky product, loans that were worth more than 95 percent of a home’s appraised value and required no documentation of a borrower’s income.

As recently as July 27, Countrywide’s product list showed that it would lend $500,000 to a borrower rated C-minus, the second-riskiest grade. As long as the loan represented no more than 70 percent of the underlying property’s value, Countrywide would lend to a borrower even if the person had a credit score as low as 500. (The top score is 850.)

The company would lend even if the borrower had been 90 days late on a current mortgage payment twice in the last 12 months, if the borrower had filed for personal bankruptcy protection, or if the borrower had faced foreclosure or default notices on his or her property.

Such loans were made, former employees say, because they were so lucrative — to Countrywide. The company harvested a steady stream of fees or payments on such loans and busily repackaged them as securities to sell to investors. As long as housing prices kept rising, everyone — borrowers, lenders and investors — appeared to be winners.

One former employee provided documents indicating Countrywide’s minimum profit margins on subprime loans of different sizes. These ranged from 5 percent on small loans of $100,000 to $200,000 to 3 percent on loans of $350,000 to $500,000. But on subprime loans that imposed heavy burdens on borrowers, like high prepayment penalties that persisted for three years, Countrywide’s margins could reach 15 percent of the loan, the former employee said.

Regulatory filings show how much more profitable subprime loans are for Countrywide than higher-quality prime loans. Last year, for example, the profit margins Countrywide generated on subprime loans that it sold to investors were 1.84 percent, versus 1.07 percent on prime loans. A year earlier, when the subprime machine was really cranking, sales of these mortgages produced profits of 2 percent, versus 0.82 percent from prime mortgages. And in 2004, subprime loans produced gains of 3.64 percent, versus 0.93 percent for prime loans.

One reason these loans were so lucrative for Countrywide is that investors who bought securities backed by the mortgages were willing to pay more for loans with prepayment penalties and those whose interest rates were going to reset at higher levels. Investors ponied up because pools of subprime loans were likely to generate a larger cash flow than prime loans that carried lower fixed rates.

As a result, former employees said, the company’s commission structure rewarded sales representatives for making risky, high-cost loans. For example, according to another mortgage sales representative affiliated with Countrywide, adding a three-year prepayment penalty to a loan would generate an extra 1 percent of the loan’s value in a commission. While mortgage brokers’ commissions would vary on loans that reset after a short period with a low teaser rate, the higher the rate at reset, the greater the commission earned, these people said.

Persuading someone to add a home equity line of credit to a loan carried extra commissions of 0.25 percent, according to a former sales representative.

“The whole commission structure in both prime and subprime was designed to reward salespeople for pushing whatever programs Countrywide made the most money on in the secondary market,” the former sales representative said."

And the winner of the the biggest scumbags in the world award again goes to Countrywide and it's Orange CEO Angelo Mozillo. This guy is the Ken Lay of the Mortgage mess. I especially like the part about "AM Shorted shares of Countrywide". The Jackass not only sold all the shares while they were up, he shorted them as well. What a lying sack of !@#$. There is a special place in hell for him.

Believe me, it's in the interest of Republicans (do they call themselves fiscal conservatives anymore? anyone?) and Democrats (Big Mother Gov) to regulate these scumbags from unscrupulous lending practices. This whole sub-prime nightmare is a textbook case of what happens when government regulation doesn't take place and investors on Wall Street believe what they are told and don't do any research for themselves. But it should be possible to on the one side lower the boom on the heads of corrupt and duplicitous mortgage lenders and realtor associations without sapping the live out of the real estate industry and tangent economies altogether.

Let us remember that most people with interest only mortgages had their new SUV's, credit card debt and other wastes of money put into their loan. Now Hillary wants me to pay for someones home, new wardrobe and their escalade. Nice.

“Every year our kids rated near the bottomcompared to other developed nations inscience and math.”--------------------An acquaintance of mine married a Russian woman, who then came to the US and brought her 11-year-old son.

Three years after they arrived, on Christmas they gave him a junior electrician’s kit which you could build things (with simple circuits) with. While reading the instructions, he stumbled over a word that he didn’t know. The word is intermittent.

When I translated this word into Russian, he knew it, as he had learned it in school by the time he was 8, but after THREE YEARS in an American public school he had not even been taught the concept!

Yes – our education system SUCKS when it comes to science.

On the other hand, it is making lots of progress in teaching kids diversity.-Mammoth